Millions of transactions are monitored everyday. Anti-money laundering (AML) transaction monitoring enables banks and other financial institutions (FIs) to analyse how their customers are spending and moving money in real-time. This action gives the organisation an entire picture of their customer, covering risk levels and predicted future activity. Our blog highlights the importance of transaction monitoring and how to monitor effectively to avoid criminal activity being carried out through your financial organisation. 

The need for Transaction Monitoring

Suspicious Transaction Detection

Transaction monitoring helps the organisation to spot a suspicious transaction which potentially prevents thousands or millions of pounds from being laundered by criminals. Banks and FIs want to actively avoid being caught up in a money laundering scandal which will ultimately tarnish their reputation and reduce customer confidence. 

Reduction of hiding places for criminals

Anti-Money Laundering (AML) seeks to deter criminals by making it harder for them to hide ill-gotten money. 

Maintain Regulatory Standards

The information obtained from transaction monitoring is primarily used to meet various AML and counter-terrorist financing (CTF) requirements, for filing Suspicious Activity Reports (SARs), and other reporting obligations. 

Key 3 areas of Transaction Monitoring

The full end to end transaction monitoring consists of 3 main elements which are setting alert thresholds, scenarios and creating alerts. 

Knowing the Customer and Loading the Transactions

This highlights customers who are most likely involved in money laundering. Loading the transaction data of historical and current information allows for customer performance analysis. 

Setting Alert Thresholds 

Setting the threshold values that could lead an organisation to identify the alerts. Adjustments to thresholds can be made using statistical analysis of the customers’ transactions, moving them above or below predetermined multiples of the standard deviation.

Creating Scenarios and Creating Alerts 

Identify behaviours that may indicate illegal, risky and suspicious behaviour and create an alert if the scenario pattern is matched for that transaction.

Do all financial firms require Transaction Monitoring solutions?

Many firms will consider transaction monitoring to be a crucial element in their fight against FinCrime, which is further highlighted in both regulation and industry guidance. Transaction monitoring is the most effective way to help financial institutions and non-banks comply with AML and Counter Financing of Terrorism regulations. Often, it can be a mandatory step to fulfil your AML obligations of continuous due diligence with regard to customers and their operations. 

How Contineo FRS can help?

We provide a wide range of services to help with your transaction monitoring needs from detecting suspicious transactions to ensuring your systems comply with the regulatory standards. Our team will be happy to give you a free consultation on our Transaction Monitoring services. Simply email [email protected] to book an appointment today. 

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